Mike Maples of Floodgate talks to Mark Cuban about a wide range of topics with a common theme...you have to go after opportunities where the stakes are high enough that when you win, you can win BIG. And as a corollary, you have to anticipate that giant competitors will try to stop you because otherwise, you are thinking too small.
Mark Cuban:
I say to every one of my Shark Tank entrepreneurs, "How would you kick your own ass? Because no one knows your frailties like you do. You know where your weak spots are and you have to anticipate that someone else is going to see them. You've got to really shore up things and beat your competitors to the punch."
Mike Maples:
That's the voice of Mark Cuban, billionaire startup founder, Shark Tank TV star, and owner of the Dallas Mavericks, who once owned a college town bar before he was old enough to drink legally. Let's just say, he's not boring. This is Mike Maples Jr. of Floodgate, and it's go time with Mark Cuban.
Mike Maples:
Welcome to Starting Greatness, a podcast dedicated to ambitious founders who want to go from nothing to awesome, super fast. When you're a startup founder, you have to channel your inner James Bond, your MacGyver, your Wonder Woman. I'm going to help you win by curating the lessons of the super performers, but before they were successful. So without further ado...
Speaker 1:
Ignition sequence start.
Mike Maples:
Let's get started.
Mike Maples:
Most of us know Mark Cuban by his larger than life persona, but the guy we've seen smoking a cigar in his private jet next to his NBA championship trophy, is actually very real and down to earth. He lives life on his own terms, but he knows where he came from. He'd probably agree with the idea that he's been lucky a few times, but never make the mistake of believing his successes are an accident. It turns out there's much we can learn from Mark's path to greatness. Let's talk to him and find out
Mike Maples:
Mark Cuban, welcome to the podcast.
Mark Cuban:
Thanks for having me on, Mike.
Mike Maples:
Yeah, I'm looking forward to this. So your relationship to entrepreneurship is a long-term one, right? I think you might've even sold garbage bags back in the day. So did it even occur to you to do anything else? Was it just one of those things where it made sense and what else are you going to do?
Mark Cuban:
No. Literally, if I wanted anything, my dad was always clear, I had to find a way to earn it. Maybe he saw my entrepreneurial spirit even back then and enabled it. But from buying and selling baseball cards, when I was nine, to garbage bags, door to door when I was 12, to selling magazines door to door, there was always something that really came down to me being an entrepreneur.
Mike Maples:
Yeah. It's funny you bring that up. It brings memories back for myself as a kid as well. I'd ask my dad, if I could have something, he'd say, "Sure you can, how much money you got?"
Mark Cuban:
Exactly. I heard those words more than once.
Mike Maples:
So you started MicroSolutions, this is probably late '82, maybe early 1983?
Mark Cuban:
83' I think, yeah. Because I'd worked nine months at Your Business Software.
Mike Maples:
Okay. So you started that off and you were learning very rapidly about how all this stuff works. And at the time it was really technical. It's like crypto today, understanding your own custody and stuff and all this. And so you figure out that people who are probably going to Your Business Software, they don't want to just buy off-the-shelf computers from Compaq and IBM, they need to make them work somehow.
Mark Cuban:
Yeah, exactly. So I start figuring out, I didn't have the credit. I tried to buy a RadioShack TRS-80, and my credit got turned down. And so what I ended up having to do was we would get a computer in for us to install their software on. And I would take those home, or I would stay late in the store and just start figuring all this stuff, out because anything related to technology, I immediately became the technology maven, for better or worse. And so I would just sit there and I would install IUS Accounting, or Peachtree Accounting, where then we got to Lotus 1-2-3.
Mark Cuban:
And literally, for a spreadsheet, I had to go to Lotus and take an official training class. And we had to become authorized as a store in order to sell this spreadsheet for $495 in the mid-eighties. It was crazy, now looking back. And then you learn the macros and you learn how to integrate it. And then there were three dimensional software, there was Borland Software, there was WordPerfect, integrating all these things and learning all these packages. But I spent the time doing it.
Mark Cuban:
RTFM, I would take that manual home and read the manual when no one else did. And I would put in the time when nobody else did. And even though I didn't have a true computer background from an education perspective I was able to teach myself. And you know how it is, once you have that foundation, everything else is just a Lego block that just sits on to.
Mike Maples:
With broadcast.com, I think you started as an investor, right? It was a fairly circuitous path, I think.
Mark Cuban:
Yeah, my buddy Todd Wagner, came to me and said, "You're the internet guy, you're the tech guy," this was late '94, I think, "and, why don't we figure out a way to use this new thing called the internet to listen to Indiana basketball and sports over the internet?" And I'm like, "Okay, that's a cool idea. Let me think about it." And we talked about it at California Pizza Kitchen in Dallas, and I'm like, "Okay, I'll give you 75 grand just to figure it out. "
Mark Cuban:
And I was just going to be an advisor. And then I became a vice president. Then I put in more money and I'm like, "Okay, this is real money now, and so I'm all in," and started running it, along with Todd. And it just blew up from there.
Mike Maples:
Oka, so you want to broadcast Hoosier basketball, and then I suppose, like lots of different... I remember at this time, I grew up in Oklahoma, and so I'm a huge Oklahoma Sooner fan. And my dad was at the IBM and Microsoft everywhere we ever lived, there's no way you could watch the Sooner's, unless it was national title game, or the Orange Bowl, or something like that, right?
Mark Cuban:
Exactly. Yep.
Mike Maples:
Yeah.
Mark Cuban:
And that's exactly what drove us. Because you had to go through so much work just to be able to listen to anything online. You had to have a PC with a 56k modem. You had to have TCP/IP login. You had to have client like a Realnetworks, or Microsoft, or Zing, or whatever we were using at the time, in order to be able to listen, so you had to work hard, kind of like crypto today with a wallet. You had to work hard in order to be able to do it. But if you were a huge Oklahoma Sooner fan, you were going to go through it no matter what. And what's Jeff's last name? One of the founders of Microsoft, early guys of Microsoft from Nebraska?
Mike Maples:
Oh, Jeff Raikes?
Mark Cuban:
Jeff Raikes, yeah. He paid us. He saw us and he said, "You know what, I'll pay you any amount of money for you to connect with University of Nebraska." He connected us, and we started broadcasting Nebraska games. Literally, back in the mid-nineties, we would have 50, 60,000 people simultaneously listening to a Chicago Cubs game, because it was the only way to listen in office. Most companies, you couldn't put a radio on your desk, or you couldn't get reception, or it was only FM, and the games were on AM. And so we were the only source of media in offices, forever.
Mike Maples:
So just immediate product market fit?
Mark Cuban:
Yeah. So literally I remember in the second bedroom of my house, I had a Packard Bell computer that I bought, a 90 megahertz Packard Bell computer with Netscape on it. And we started setting up, I think it was Zing initially, one of the first streamers. And I tried to do it with Sun, with some remote file saving. And it didn't really work very well, but it was all on demand. And so we went to a local radio station, KLIF, and I would take a VCR, an eight hour VCR with eight hour tapes, and I got the tastes back there from our very first time. And then I would bring them back and I would encode them on my PC in my bedroom, connect them to the Netscape server that we had in my bedroom.
Mark Cuban:
And then I would get on all the chat boards on CompuServe, whatever it was. Anything related to Dallas, related to Dallas sports, related to Dallas teams, related to Dallas topics. And I would say, "If you have any interest in Dallas, you're anywhere in the world, do these steps and go to audionet.com." A hundred people, a 100,000 people, 10,000 people. And then the requests started coming in and then we would go to all these radio and TV stations and networks and say, "Look, we're the future of cable."
Mark Cuban:
"Ah, yeah right. Whatever. I'll just turn on my cable." People didn't even fully understand satellite at that time, satellite was brand new. And so I'm like, "No, you don't get it." And then we had a survey, a study done, from [inaudible 00:08:45], saying that we were the primary media device on 97% of PCs and offices. And we would show that to them and say, "Look, even in your local trade market, they can't listen to you during business hours. They can only listen to you in the car and at home, so you need us."
Mark Cuban:
And we set up a program where in exchange, we would broadcast your radio, and in some cases, the audio from TV networks, and you would pay us in unused air spots. In other words, we would take your unsold inventory, and then we would bundle that all together and resell it. And that was a big source of revenue that helped us get started.
Mike Maples:
Somewhere along the way, I think it was '98, you renamed it to broadcast.com. And now, had you started to try to do video streaming yet?
Mark Cuban:
Yeah, of course.
Mike Maples:
Okay.
Mark Cuban:
Yeah.
Mike Maples:
Yeah.
Mark Cuban:
Obviously we knew we were going to have to do video. We bought the name broadcast.com for $8,000. And that was just a catchall that worked for everything. And broadcast obviously meant everything. And by that time, most of our revenue came from corporate streaming. We used the Cubs games and sports and all the music and everything we had on. We were breaking bands. Matchbox 2020 broke their first big album on broadcast.com's CD Jukebox. Willie Nelson released albums on broadcast.com, CD Jukebox. We did concerts. But we had really started pushing the envelope in that direction and, and really started pushing video at that point in time, because corporations really needed us. Because back then, if you wanted to have an all hands meeting with video, you would rent satellite time and then go to a local theater, or if you were a big company, you had a satellite dish and that's how you would do it.
Mark Cuban:
so we went to companies like Motorola, I'll never forget. They ended up being an investor and saying, "Look, it costs you a million dollars to do an all hands. We'll do it for 500k. There's going to be some fits and giggles along the way, but let us work with your IT people, deal with the firewalls and all that, and it'll work." And it did. We started working with Intel whenever their latest Pentium was, we broadcast the product release with Andy Grove in 20 different languages. It was crazy and it was worldwide and across all these different time zones. And so all the entertainment stuff was proof of concept. But the real moneymaker for us was when we started doing corporate events.
Mike Maples:
Looking back on broadcast then, what do you think are the most important things you guys got right? That folks who want to start startups, or in a startup right now, what do you think they can learn? If they haven't found product market fit what can they learn from what you did there?
Mark Cuban:
You've got to really believe in your product. Remember, in the mid-nineties and late nineties, satellite was just starting. So we were competing with satellite, and there was obviously cable television has been around for 15 years. And so when I would sit and tell them the vision, they were like, "You're crazy. I'll just turn on the TV." People would laugh at me, "I'll just turn on the radio." But what I believed in was the price performance curves of PCs.
PART 1 OF 4 ENDS [00:12:04]
Mark Cuban:
... was the price performance curves a PCs. And the price performance from investments in broadband, that PCs would continue to get more powerful. Moore's Law would stay in effect for at least some period of time. The price of disk drives, of networking costs, of bandwidth would continue to fall. And I truly believed that. And that was a fundamental underpinning for streaming. We called it network broadcasting back then or internet broadcasting. And I firmly believed that streaming would take over all of television because we're going through a convergence of analog television to digital. Literally, there was one point in time after Yahoo! bought us where I was trying to get us to buy all the HD bandwidth from USA Networks. And I thought we were going to have a deal because I just wanted as much wireless bandwidth as we could get trying to do wireless transmission because we had just seen Sirius and XM do that just for audio. But being able to take that 19.2 Megabits, who knows what I'd be able to send to, back then, MP3 players that had no ability to take downloads without connecting.
Mark Cuban:
And so I had that vision that we would follow this path. I saw very quickly that the user adoption was enormous. No one used it and said, "I don't need it." They might have said, "It was a hassle or I'm not willing to go through that." But no one said, "I don't need it." And so when those two things connected, I knew, I knew, I knew, I knew this was a winner. I had no doubt in my mind because of my experiences. And so for entrepreneurs out there, the couple things are, what's the premise, particularly in technology, what's your premise? What is it that makes you guys unique and makes it so that you're sure that you're going to be able to implement what you're trying to implement? What is it that users are going to take away and are you the path of least resistance? And I guess, that really is the underpinning.
Mark Cuban:
I knew that in order for you to listen to OU Sports, I was the path of least resistance. I knew that anybody who wanted to watch or listen to a Mavericks game, I was the path of least resistance. There were no other paths where you could do what I did. There might have been some people competing to try to do the same thing and copy us, but taking our approach, nobody else, we were the path of least resistance. And so if you have the technology working in your favor, you're the path of least resistance, and you have consumption, then you just got to go for it. You just got to go for it because those are the pieces that together create a moat that are really hard to replicate. And then once you get going, building more moats on top of that and creating new, innovative things that allow you to avoid the innovator's dilemma.
Mark Cuban:
I would always talk about kicking our own ass. If I'm competing with me, what would I do? And how do I do that before someone else does it? That to me is always the takeaway from broadcast. I say it to every of my Shark Tank entrepreneurs, how would you kick your own ass? Because no one knows you're frailties like you do. You know where your weak spots are and you have to anticipate that someone else is going to see them. You can't just hope that no one else recognizes that you can't ship this or your shipping costs are that, whatever it may be. Your development costs are this. You had this breakdown in your code. You've got to know these things and assume, because now the tool's available to tear apart other, to reverse engineer things and supply chains are incredible. And so you've got to really shore up things and beat your competitors to the punch.
Mike Maples:
Yeah. Well, exactly. And then the other thing that I've learned is that a big competitor coming into your market, it's axiomatic that it will happen if you're going after an opportunity that matters enough, right?
Mark Cuban:
What did Bezos say?"Your margin is my opportunity." Right?
Mike Maples:
That's right. So if you never attract a big competitor, you've got a bigger problem. You just didn't do anything that mattered enough.
Mark Cuban:
But the one thing you can't say, the one thing that irks me beyond any, "Well, this big company, that big company came in. That just confirms the market is there, right?" No, no. It means you better be speeding up and you better be building that moat and you better be differentiating enough where... Look at Facebook. Facebook goes into every market second. Facebook doesn't lead in hardly anything. Maybe Libra, we'll see what happens there or whatever they renamed it to. But they rarely, rarely, rarely lead. But they rarely succeed in the markets that they go after, the secondary markets. They're much like Microsoft used to be before the cloud, before Azure. They had their taxes, the ads, Windows, et cetera, where they get paid and Facebook has got theirs with their ads and the way they really use AI great, but there's certain companies like Facebook, okay, if they come into your market, you're going to see where their frailties are, but you got to anticipate it and be ready for it.
Mike Maples:
Yeah. And it's like, yeah, it validates the market. But the energy should be game on. It's like, okay.
Mark Cuban:
Yeah. And if you start telling people, "Well, if it just validates the market, see that's proof that we're doing the right thing." No. It better be a healthy dose of fear, but also using that energy to really push forward. Because you've got to stay ahead. They can be stupid a lot longer than you can be solvent.
Mike Maples:
Now you have another saying that I think relates to this. You only have to be right once. And it's one of my favorite Mark Cuban-isms. So what's that all about?
Mark Cuban:
So, I did a lot of stupid shit and had a lot of dumb deals, but people don't remember or know anything about those. They don't know about the powdered milk. They don't know much about Your Business Software. They don't know all these little companies that came and went. Just so much dumb stuff. But you're right one time and now all of a sudden, people call you an overnight success, even though it might have been 10 years in the making, but you learn. I learned from every failure. I learned from every time I got fired from the companies I worked for. I think I learned more from the companies I got fired from or left than I did from the companies that I really enjoyed. I learned what not to do. And sometimes that's more important than anything.
Mark Cuban:
But, if you keep on grinding and you make things happen, you're going to learn from them if you fail. And if you keep on going forward, all it takes is just one, just one. Whether it's Micro Solutions, that could have lasted me a lifetime, whether it was trading stocks, that could have lasted me a lifetime, whether it was HDNet, that could have lasted me a lifetime, whether it was broadcast.com, you find these niches where you can get good at them and you can keep on trying until you make it.
Mike Maples:
Yeah. So one of the things I like about this notion is the idea of an entrepreneur's relationship with risk. A lot of people tend to think of risk as something that's negative, that you want to avoid, that's bad. But another way to look at risk is, risk is something you take as a verb. And on some level, if you're going to start something great and have a B next to your net worth, you have to take a bet on a different future than most people see. And your probability of success may even be less than 50%, maybe less than 10%, but the upside's so asymmetric that you only have to be right once.
Mark Cuban:
Only have to be right one. And then people tell you how lucky you are. You're right. You're exactly right. And you always hear the story over and over again, like I mentioned, people telling me I was crazy because I just turned on the radio, just turned on the TV. And it's the things that people think you're crazy at. When you do those things, because that's where the greatest risk is. When everybody says, "I don't even see it," but you do and you know it's just a matter of time until it comes your way. That's good risk.
Mike Maples:
I guess the other thing I've learned is, in a startup, you want to escalate your commitments as you escalate your certainty. And so you want that scar tissue and muscle memory of the early- [crosstalk 00:20:02]
Mark Cuban:
Yes. That's a great way to put it, Mike. Great way to put it. When you see things going your way, you better speed up. Because everybody else has seen the speed you're going at and they know what speed they have to hit in order to catch you. If you don't use the corporate knowledge that you have to continue to speed up, you're going to be behind. Particularly in technology, it's just non-stop search for knowledge. Most people don't put in the time to learn, and you've got to always be learning. That to me is the greatest trait of any entrepreneur. Markets change. Everything, changes, technology impacts everything.
Mark Cuban:
We're talking about AI right now, and there's so much fake AI. And you as an entrepreneur, it may not be your core competency, but it's one of those new significant things that is going to change your industry. Much like PCs did in the '80s. I would walk in and people are like, "I don't need a PC. I got Susie over here, takes notes, Johnny, over there who takes notes." But it did change. And if you were a dinosaur and didn't pay attention, same with the internet, same with mobile. Now it's AI. In parallel, it's also crypto to a certain extent. Defi is going to change a lot of things and the way a lot of things are done. Digital collectibles, digital goods, NFTs, all of these things may seem tangential to your business right now, but they're not. Particularly AI because your whole company may be disposed of by artificial intelligence at some level, or there may be a level of efficiency that you can't match. And if you don't understand it and you don't use your corporate knowledge, your industry knowledge to leverage that, you're toast.
Mark Cuban:
So, you've got to have that edge. But on the flip side, if you learn it and you're able to integrate it in ways, and it may not be you personally, but you need to understand it, but find the right people to do it, a person to do it. Then you got an edge.
Mike Maples:
I've enjoyed looking at the 12 Cuban Rules of Startups. I think founders might get a kick out of them. So maybe we should talk about a few of them.
Mark Cuban:
You've got to list them because I wrote that so many years ago.
Mike Maples:
Yeah. So, I'll just go through them. So don't start a company, unless it's an obsession and something you love.
Mark Cuban:
Yeah. Because any founder will... We talked about earlier, where I would be programming and 20 hours would go by. I went seven years without a vacation. I had no problem doing that. I could have always dialed back, but I didn't. I loved what I was doing. I dreamed about it. I would wake up writing notes. That's how consumed I was by it. The exit strategy wasn't part of the thinking at all, until it was presented to us.
Mike Maples:
Which is, by the way, your second rule. If you have an exit strategy, it's not an obsession.
Mark Cuban:
Yeah. And you see it all the time. Entrepreneurs come in and they immediately say when they're going to exit, and I immediately say, "I'm out." Because you're not committed enough to live it. And that's a key component of success.
Mike Maples:
Yeah. This is some of the bad, and well-intentioned advice I see a lot of founders get from their advisors. They say, "When you pitch a VC, when you pitch an investor, you've got to have an exit strategy. You got to explain what it is." And I come away feeling sorry for those folks.
Mark Cuban:
A hundred percent, a hundred percent. One of my favorite investments is a company I put in $75,000. I think it was, for 40% because this guy was living out of his car. It was a cookie company called Alyssa's Cookies. He was broke, living out of his car. Fast forward eight years, we did, in the pandemic time it hurt us a little bit. We were only up like 10%, but we did like $16 million, no $18 million, but 9 million of it was profits. And so my 40% of that 9 million, I'm getting quarterly. And that's a gift that keeps on giving. He loves it. He'll keep on working until he decides he doesn't want to. But those types of investments where you're just getting checks, the best-
PART 2 OF 4 ENDS [00:24:04]
Mark Cuban:
... those types of investments where you're just getting checks. The best Shark Tank investment ever was a product called Comfy. I think Barbara gave them $75,000 for 25%. She's earned, their totals earned, 30 some million dollars, million dollars, because they learned how to execute with a great product that people love.
Mike Maples:
And then I guess the third and related Cuban rule, hire people you think will love working there.
Mark Cuban:
Yeah, pretty straight forward, right?
Mike Maples:
Yep.
Mark Cuban:
I hired people I trust. I hired people that wanted to put in the hours, because if they're nine to fivers, it's tough.
Mike Maples:
Yeah, yeah. And so number four, sales cure all.
Mark Cuban:
Oh yeah, that's easy. There's never been a company in the history of companies that's succeeded without sales at some point. That's the only way you can make money.
Mike Maples:
It's pretty hard to fail if you sell a lot more than you thought you would.
Mark Cuban:
Right, particularly profitably, and I think that's part of the challenge now. We really have to get, particularly technology companies, trying to convey to them that it's gross margin dollars that we care about. It's not just top line revenue. Because I have a company right now I'm dealing with who says, "Well, we'll be able to do this, this, and this if we hit 10 million run rate." I'm like, "If you're just buying sales, it's going to catch up to you at some point." You can't just do that forever and make this about an ROAS on your ad spend. No, you've got to find a reason why everybody loves your product. That company I mentioned to you, Alyssa's Cookies, zero, that's how much we spend on advertising every year.
Mike Maples:
Yeah, I have this term, I call it fake growth.
Mark Cuban:
Yes.
Mike Maples:
And I believe that fake growth is as endemic to business right now is fake news is in politics, and it manifests itself in two ways. One is, most of the share gains in the Fortune 500 are share buybacks, which to me is fake growth in big companies.
Mark Cuban:
Yep. Financial engineering.
Mike Maples:
Yeah. And then fake growth in startups is the amount of value that gets created can't be justified by the amount that you burned. And I see it all over the place.
Mark Cuban:
Yeah. I mean, look, in most of those companies, they're either forgotten or they get bailed out, because they have no future so someone can buy them, not necessarily pennies on the dollar, it may be a lot of money, but it's a bailout effectively.
Mike Maples:
Yeah. And quite often the entrepreneurs get nothing because it's not worth the preference stack and it's just how generous the VC is going to be in the carve out.
Mark Cuban:
Preference stacks are the scariest words entrepreneurs will ever hear from investors, because you know you're in trouble.
Mike Maples:
Yep. Yep. Rule number five, know your core competencies and focus on being great at them.
Mark Cuban:
You can drown in opportunity, and so whatever you're good at, whatever it is, be great at it, because someone is going to be out there trying to copy you, compete with you, whatever it is, and you've got to be better than them and it's got to be a never ending drive to continue to be great at it. Now, sometimes you've got to pivot, but more often not, if you can find something you're great at, and there's a market fit for it, you're going to win.
Mike Maples:
Yeah. And I guess the other big upside in knowing what your core competencies are, is when you have a debate on the development team about what feature matters most, or what should we focus on? You lean into that, right?
Mark Cuban:
Absolutely, because otherwise you get into feature creep and everybody's trying to make everybody happy and everybody's tried, because what you try to do, you try to do these pickoffs of customer needs, where this customer said this and this customer said that, and the product keeps on getting wider and more unwieldy. And that's when you fall apart and you've got to go back to say, "What are we good at?"
Mike Maples:
Yeah, we have this term, we call it revenue chasing. It's when you say yes to things that people reactively ask for that aren't additive to the strategy.
Mark Cuban:
Of course, right, and particularly with salespeople because they want to close the deal and so what ends up happening, you get into this mode where you're stressed because your top line is not where you need it to be or where you projected it would be.
Mike Maples:
Yep.
Mark Cuban:
And then you've got a sales rep whose goals in order to meet what they want to do for their income, they've got to hit a number. And so they're trying to push in a direction and when the entrepreneur or CEO waivers to say, "Okay, I'll take that revenue, because I've got to hit my numbers, "that's when you start to run into problems, because your company is not built to deal with supporting those types of things.
Mike Maples:
Now, what I like that's related to this core competency idea of yours is that I think I once heard you say, maybe this was in your book, "Pay up for people in your core competencies, but if it's outside the core competency," their job that is, "higher culture fit and people who are cheap."
Mark Cuban:
Yeah.
Mike Maples:
Let's talk about that for a minute. I think that's interesting.
Mark Cuban:
Yeah, look, you want the best. You want the people who can accelerate you, hat really know what you're trying to accomplish, that fit the vision. Because you're moving forward, you're trying to speed up, like we talked about. And then there were things that aren't part of those core competencies that if you bring in somebody that thinks they're a superstar but is outside the realm and they're there for whatever reason, maybe you have one customer you're trying to take care of. You don't want to necessarily pay for somebody because they're going to cause a lot of stress. They're going to have personal expectations. And so I guess maybe a better way to say it may be, outside your core competency. you better make sure that their vision, this new employee's vision, aligns with your vision, which is the culture fit.
Mike Maples:
Right, yep.
Mark Cuban:
Because if they're there and they're just doing their job, because you still need nine to fivers. The way I always say it, there's you need people that if you tell them to do A, B, and C, they do A, B, and C perfectly. Those are stress reducers. There are some where you tell them A, B, and C and they see D, E, and F. And you need some of that, but you don't want too much of that, because they in turn may not get the A, B, C done. And then there's some people that don't even pay attention to A, B, C, or D, E, F. They're in G, H, and I and they're trying to be a visionary.
Mike Maples:
They're like Mark Cuban before he got fired.
Mark Cuban:
Right. But unless you're trying to put them in a visionary position, they're a problem. They're not a culture fit because you can't have conflict on what the vision of the company is. And so you've got to hire the right people for the right roles. And when, in doubt, at their outside, where you really need to have everything going, your core competency, get people who really are stress reducers that fit in the culture, because they're going to help. They're going to be the glue guys. Like on a basketball team, you need the glue guys that know their role, the people who are going to dive for the ball, that are going to rebound, that may not get all the glory, but those people are the people you can't live without. Those are the people that you're giving raises to even though they may not have asked for it because you know and you recognize very quickly you can't live without them.
Mark Cuban:
I talked about the A, B, C person, but there's those people who create stress and those people who remove stress. And more often than not the people who create stress, create this hurricane that they can solve and only they alone can solve and they think they're your biggest stress reliever when in reality they cause you more headaches than anybody. And then on the other hand, there are people who seek out your pain points and your stress points and just solve them and don't make a big deal about it, and they're the ones that you can't live without. And so, as an entrepreneur, you have to recognize who is who. And there's the old saying, "Hire slow and fire fast." Once you realize that somebody is a stress creator, you have to get rid of them, because they infect other people.
Mark Cuban:
In basketball, I always talk about, you can have one knucklehead because they fit the culture, but the minute you have two, they hang out together and infect a culture. And stress creators are the same way. They're just a whirlwind and they create things that only they can solve, which don't necessarily match up with the goals of the company.
Mike Maples:
Okay. And number six, an espresso machine. Are you kidding me?
Mark Cuban:
Every penny you have is precious. Why are you spending it on an espresso machine? Coffee's for closers, first of all, but an espresso machine, I never got that.
Mike Maples:
Well, and especially if you raised venture capital, because venture capital is really expensive money. And so on some level, if you spend venture capital money on something like an espresso machine, you're making an explicit statement about what you really think your stock is worth in the longterm and what trade offs.
Mark Cuban:
Yeah. And you're saying very specifically, "I don't have a better place to put it."
Mike Maples:
Yeah. Because in the end, if you're a startup and you're raising VC money and spending VC money, you're spending equity. And so that's why you want to spend on your core competence, because if you spend equity on your core competence, you create compounding advantages in the company. But an espresso machine is the opposite of compounding, it's going to depreciate in value.
Mark Cuban:
That's exactly right. There's got to be value in return on everything you do as a startup, and if you don't recognize that, that's a red flag.
Mike Maples:
Yeah. I mean, I remember with us when we had our startup motive, I bought a used lifecycle exercise bike with my own money and put it in an extra room. And then Tom Brider brought in an espresso machine with his own money.
Mark Cuban:
That's fine.
Mike Maples:
But it was like back to my dad, "Sure, we could have that. How much money you got?"
Mark Cuban:
Right. That's exactly right.
Mike Maples:
"But it's not coming off the balance sheet of this company."
Mark Cuban:
100%, 100%. There was a time when people would try to use their office as a way to show that they were successful. "Look at my office, I've got this oak or this or whatever." And our offices were always dumps, and I mean that in the kindest way.
Mike Maples:
Us too.
Mark Cuban:
We would have open offices. We would have side-by-side cubicles. I was a big believer in the old HP management by walking around, that I want to be able to see everybody. Because in a start-up, you can feel an energy. It's like going to a Mavs game and you feel the energy when you walk into the arena, back when we had fans, when there's a game and you feel that energy. In a start-up, you can feel that energy too. It's like electricity that's in the air that invigorates everybody that's there, and if it doesn't, you have an indication of their fit. And so by doing all these ancillary things that aren't a creative, you're just making things more difficult.
Mike Maples:
Yeah. I had the same thing when I started Floodgate, I was like, "I'm not going to even get an office till I can prove to myself I need one." So I would drive around in my car and I had these boxes in the trunk with all the files in them. And one day it was really hot in the summer, I'm at Stanford Shopping Center, trying to find a place under the parking garage to get shade and I'm just sweating like crazy. And I'm like, "Okay, maybe time to get an office." But then when I got an office, I rented this place for 1000 bucks a month from Rocks Row Pharma, and they subleased it. And it said, "Rocks Row Pharma" on the window and so entrepreneurs would come to meet with me and they'd be looking at the window and it would say "Rocks Row Farm" and they'd be squinting through the window at the wrong place.
Mark Cuban:
To see if it was you.
Mike Maples:
But I invested in Twitter, Digg, Twitch, Chegg. Yeah, I invested in multiple billion dollar outcome companies and it said "Rocks Row Pharma" on the window when I was paying $1000 a month.
Mark Cuban:
My first company, Micro Solutions, my first office was one of my distributors that I was buying from said, "Look, you've got to have something." And so they had an extra room that when the distributor's son wasn't using it to practice his Spanish I was allowed to use it, so I had to schedule a time. So that was my first office.
Mike Maples:
No offices and no privacy, I'm really curious about this, how you think about that these days.
Mark Cuban:
Well, that goes back to what I said earlier, I like the energy. I like the management by walking around. I like open doors. I wanted everybody to feel good about talking and being focused, because with-
PART 3 OF 4 ENDS [00:36:04]
Mark Cuban:
And being focused. Because with privacy, particularly as you're getting to a point where you're at 50, 100 employees and right in that range, right? People tend to really get territorial, right? And you're starting to have more management and you're starting to be more vertical.
Mark Cuban:
And I really want to have the openness. There's going to be a point in time where you're going to have offices, right? And people are going to have privacy. But if you're in that 50 to 100 employee level, cubicles, I mean, when I got to the Mavericks, for years I didn't have an office. I mean, I had, when I first got there, it was a desk right next to all the salespeople in the sales bullpen. And it was just like, "Look, I've got the list of former customers. I'm going to be making sales calls right next to you and we're going to try to bring people back to games." When it was AudioNet, broadcast.com, it was the same way until we got into the hundreds of employees and then, okay, your lawyer needed some privacy and stuff like that.
Mark Cuban:
But if you're in that 50 to 100 employee range, open office, cheaper office, warehouse space, going to Staples and getting... I mean, literally, I don't think I spent more than $29 on a desk the entire time we have broadcast.com
Mike Maples:
Keep the organization flat. I think we've talked about this a little bit already, but yeah.
Mark Cuban:
Yeah, particularly at the beginning. You don't need managers reporting to managers because managers just want to manage, right?
Mike Maples:
Yeah.
Mark Cuban:
When you're just getting started, you want results and you want people who are close to customers as possible.
Mike Maples:
Number eight, let people use the technology they already know.
Mark Cuban:
You have to have the perfect solution, right? I think I said something like it because it was so long ago, if you know Windows NT, stick to Windows NT, right? And stick with that. You don't have to have the latest and greatest to show off, because being able to move quickly because you have a strong background in something is so much better. You don't have to switch to the latest and greatest programming language just because everybody else is.
Mark Cuban:
Now there'll be a time and you want to program it so that it's extensible and it can evolve to wherever you go, but particularly when you're just getting started, to your point earlier, you want to get return on all your time. You want to get return on all your investment and you don't want to have to go to the latest greatest because there's a learning curve for all of that and that learning curve has an expense.
Mike Maples:
Never, ever, ever buy swag.
Mark Cuban:
Yeah. Other than your own company, right?
Mike Maples:
Right.
Mark Cuban:
It's one thing to buy it for your own company, right? But to buy it to give away, right?
Mike Maples:
Yeah.
Mark Cuban:
All the swag you've ever gotten in your life, how often have you worn it other than maybe because it's one of your portfolio companies asking you to wear it?
Mike Maples:
Right. Right.
Mark Cuban:
And even then, you feel guilty. It's like, why are you even doing this, right? Buy t-shirts for your company, do the [inaudible 00:38:51] and do the stuff, whatever to create familiarity and cohesiveness, but at the same time, if you think that handing your t-shirt that said Micro Solutions on it to one of your customers or vendors, they're going to wear it, you're crazy and you just wasted all your money.
Mike Maples:
They're going to say, "Oh yeah. I want to wear robosoftware.com t-shirts all day long."
Mark Cuban:
Yeah, it's just not going to happen. And don't waste that money. And I never understood it. And like today, people I don't even know send me swag from their companies. Like I don't know you. You think I'm going to where it? And you just spent that money? That's the one reason I'm not going to invest in you.
Mike Maples:
Never hire a PR firm.
Mark Cuban:
Yeah. Now, this is the one I got the most grief off of.
Mike Maples:
I can imagine.
Mark Cuban:
Yeah. So to me, a big part of my success has been building relationships with influencers, and by influencers, I mean they could be media, someone who writes in traditional magazines or newspapers or television, people who write blogs, people who have social media accounts. When I develop a personal relationship with them, that allows me to call on them, right? But more importantly, anybody who's a content creator that has influence within your industry, your customer base, whatever it may be, they're always looking for content.
Mark Cuban:
And so when you go through a PR agency, first you have to explain to the PR agent or PR person, right, what it is you want. Then you have to explain to them what it is you can convey to the potential media outlet. And then you have to talk to the media person, that outlet, the content creator and explain the whole thing all over again, right? And then because of this relationship you developed using the PR firm as the intermediary, now you've got to go through that process every time, when what I learned early on was if I saw somebody who wrote anything in newspaper, trade magazine, website, whatever it was that I thought I could add value to, I always emailed them and just said, "Hey, if you have any questions, here's something you may not know, but if you have anything related to this industry, this company, or whatever, just email me, I'm happy to help you. If you're looking for ideas on what to write about," because they always are, "I'm happy to help you." And by developing that relationship, it really, really, really helped.
Mark Cuban:
Now, there are times when you may be new to an industry and you're coming to a company and you don't know it. You're not necessarily the entrepreneur, you're coming to work for a company, okay, there's places for a PR agency, or you add a new product that may be in a new vertical, it could be food, it could be software, whatever, okay, you see that as a natural extension and you don't have those relationships and your company's big enough where you don't have the time to develop those relationships, okay, I can see it. So I'm not always...
Mark Cuban:
Or maybe like we have a food product from Shark Tank called Unreal Deli. It's a vegan deli product. And she doesn't have the time right now to go out and develop the relationships with all the grocery stores or the grocery store trade magazines. Okay, if you just can't do it, but any other time, if it's a startup, you need to be able to find the time to develop those relationships. Because you talk about an arbitrage, the arbitrage of your time will get you a great return.
Mike Maples:
Yeah, and it sounds like related to it, you're kind of suggesting don't treat PR as a transactional activity, right? Like you don't say, "Hey, I expect a story this week." It's more like I'm just going to be helpful to the people I care about and-
Mark Cuban:
It's relationships, right? You're developing relationships with people who have influence in your industry. And it's always better to have that direct relationship. You never want to have an intermediary if you can avoid it.
Mike Maples:
And then make the job fun for employees, that last one. Yeah.
Mark Cuban:
Yeah. Now, the way we used to make it fun in the '80s is a lot different than making a fun in the 2021s. But yeah, I mean, you want people to want to go to work. You want comradery. I don't care if it's a game of Jenga, right? I don't care if it's a competition. I don't care if you game-ify something, but people in a startup in particular, there's always a significant amount of stress, right? There's always going to be expectations. There's always going to be uncertainty. There's always going to be hope. But around that stress, you want to be able to give people a way to relieve it. And particularly now when everything is remote and from home, right, you've got to find ways to connect to people so that they can have some fun and enjoy the fact that they're working for you.
Mike Maples:
All right. Well, cool. I'm not sure how I'm going to even edit this down, but I really appreciate your taking the time, Mark.
Mark Cuban:
I love your perspective as well, right? I mean, we're in sync on almost everything. And so, if I were going to write another book, all the subjects we covered, that's what I would put in the book.
Mike Maples:
Thanks so much. Talk soon.
Mark Cuban:
Yeah. I enjoyed it, Mike. Thanks for having me on. It was really, really good. I really enjoyed the questions.
Mike Maples:
Thanks for listening to the Starting Greatness podcast. If you've enjoyed this episode or you're new to the show, I hope you listen to our past interviews with legendary founders like Reid Hoffman, Marc Andreessen, the Instagram founders, and Keith Rabois. I'd love to have you subscribe wherever you get your podcasts so you don't miss an episode. And if you liked the show, I'd be grateful if you leave us a review on Apple Podcasts.
Mike Maples:
You can also follow me on Twitter @M2JR and subscribe to our newsletter for exclusive content and events at greatness.substack.com. Until we catch up again, I hope you'll never let go of your inner power to do great things and whatever matters to you. Thank you for listening.
PART 4 OF 4 ENDS [00:44:36]